States wrestle with new Obamacare exchanges

Wanted: States to work on Obamacare health insurance exchanges. OK to keep it sort of hush-hush.

More than half the states have declared they want nothing to do with setting up or running those health insurance marketplaces opening in their states later this year. But a closer look shows that at least a few of these states, like Ohio and Virginia, may have a larger role than they’re letting on.

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When potentially millions of new customers start to enroll in exchanges come October, just 17 states and Washington, D.C., are currently slated to run their own. Elsewhere, the feds will play a big role in running the insurance markets, where people can shop and compare plans, often with federal subsidies.

That includes seven states that have signed up for “partnerships.” That means the Department of Health and Human Services, at least for the first year or two, will handle the technical side of things — like building the complex IT systems and helping people to sign up for coverage. And the state partners will maintain their traditional control over their health insurance markets. Partnership states can either run consumer assistance programs, oversee health plans in the exchange or both.

But even as a number of Republican governors sign up for the law’s massive Medicaid expansion, many remain wary of being associated with the exchanges. So entering into a “partnership” with the feds doesn’t do them any political favors.

“Some people don’t like the idea of a partnership, because the concern they have is one partner is superior to the other,” Utah Gov. Gary Herbert said in an interview with POLITICO recently.

Most states are taking a hands-off approach to the exchanges, even after the Supreme Court ruling and the November election made it clear the GOP opponents of Obamacare weren’t going to stop the law in its tracks. So HHS has been carving out a quiet role for states to play even in these federally run exchanges. As an enticement, they’re even offering states grants.

And that role looks an awful lot like a partnership exchange, even if neither the states nor HHS wants to come out and say so.

“I can’t discern any meaningful difference between a partnership where a state controls plan management and this [federal-run exchange] plan management option,” said Avalere Health Vice President Caroline Pearson, who has been tracking exchange development across the country.

In states where the feds will be running the exchange, HHS officials are hoping local insurance regulators will manage oversight of the health plans. Both in and out of exchanges, health insurers are going to have to follow many new rules under the health care law’s coverage and consumer protection requirements.

Joel Ario, the Obama administration’s first top exchange official who is now managing director of Manatt Health Solutions, said the role the Obama administration is developing for states is quite similar to what they’d be doing under a formal HHS partnership.

“The big difference here is that the partnership is about collaboration and has a political connotation that states are uncomfortable with,” he said.

A spokesman for HHS wouldn’t respond to a question about how partnerships differ from the state role in federal-run exchanges.

There’s a reason that even the fiercest anti-Obamacare states can’t entirely shun federal-run exchanges. States have always regulated their own insurance markets, and they are likely to keep doing that to at least some degree in the exchanges, according to experts tracking how the law is being put in place.